Month: March 2012

These five U.S. banks are not only financially fit… they're on track for share buybacks and high dividends in 2012.

In January, bank regulators voted to release a proposal for how banks with more than $10 billion in assets should conduct stress tests annually. The purpose of the tests is to gauge whether or not individual banks can withstand another major economic downturn.

The tests are now a required cost of doing business due to the 2010 Dodd-Frank financial oversight law. Stress tests have become a key component of how regulators will assess the health of the banking industry.

The Federal Reserve also decided to put banks with more than $50 billion in assets through separate tests to gauge whether they have sufficient capital. The results of these tests came out last week…

Such tests presented a worst-case scenario under which the unemployment rate peaks at 13%, the equity market dives 50 % (which would put the S&P 500 at 685) and housing prices could somehow be more awful and decline by 21%.

Another of these differing scenarios includes a “supervisory stress scenario,” meant to capture the likely environment if another U.S. recession would affect banks with simultaneous slowdowns in other major economies, like those of Western Europe or China.

Withstanding Financial Shock

The Fed is attempting to ensure that banks have enough capital reserves on the books to withstand a financial shock like the one back in 2008 and be able to withstand it without that venomous phrase “government bailout.”

“Strong capital levels are critical to ensuring that banking organizations have the ability to lend and to continue to meet their financial obligations, even in times of economic difficulty,” the Fed said, noting that U.S. firms have rebuilt their capital levels on its watch since the first government stress tests of early 2009.

And the public will be made privy to much of the information from these tests. The Fed expects to release bank-by-bank results based on the projections – as it did in 2009, but did not last year. The Fed said the results will consider losses, revenue, expenses, and capital ratios over the planning horizon.

Investing opportunities?

The Federal Reserve also said it will allow a number of the big U.S. banks to raise dividends to a ceiling of as much as 26% of earnings as part of the latest round of stress test results released last week.

“Even with stressful scenarios, the stress tests will demonstrate that banks are in a stronger place, far stronger than in 2008,” said Fred Cannon, Director of Research at Keefe, Bruyette & Woods Inc. in Washington. “We think companies like J.P. Morgan Chase (NYSE: JPM), Wells Fargo (NYSE: WFC) and U.S. Bancorp (NYSE: USB) will show meaningful increases in dividend and share repurchase plans.”

The big news for investors is that how the institutions graded on this last set of tests determined the possible extent to which they can provide dividends and share buybacks.

Well, the grades are in…

And here are a few of the 15 out of the 19 banks that passed who have already made known their fairly aggressive stock buyback plans and increased dividend:

• American Express (NYSE: AXP) – Passed stress test with 10.8% capital ratio. Raised dividend to $0.20, from $0.18, and authorized $4 billion 2012 buyback, up to $1 billion in 2013.
• Bank of New York Mellon (NYSE: BK) – Passed stress test with 13 % capital ratio and said it will move ahead with $1.16 billion stock repurchase. Also affirmed dividend of $0.13 per share.
• BB&T (NYSE: BBT) – Passed stress test with 6.4% capital ratio. Upped dividend 25% to $0.20 and said Fed did not object to planned redemption of $3.2 billion in trust preferred securities.
• J.P. Morgan Chase (NYSE: JPM) – Passed stress test with 5.4% capital ratio under stressed scenario, including proposed capital actions through 2013. Increased its dividend 20% to $0.30 per share, from $0.25 and authorized a $15 billion stock buyback.
• Regions Financial (NYSE: RF) – Passed stress test with 6.6% capital ratio, announced $900 million common stock offering to go toward repurchasing $3.5 billion in preferred shares owned by the Treasury Department dating back to loans from the Troubled Asset Relief Program (TARP).

Good Investing,

Jason Jenkins

Article by Investment U

By TraderVox.com

Tradervox (Dublin) – The USD is nearing above the initial resistance signaling the end of the recent downward trend registered yesterday. Many analysts have taken this to mean that upward trend is gaining momentum. Euro declined after the Manufacturing and Services Purchasing Manager’s index came below the expectation.

Economists and investors had expected the Euro region PMI composite indicator to come at 49.6 but the actual value has been reported at 48.7. The economists also expected the PMI manufacturing to come in at 49.5 but came in at 47.7. The services sector registered a value of 48.7 against an estimated value of 49.2. These readings indicate that the euro market contracted during this period.

Both France and Germany, which are the region’s greatest countries registered weaker than expected values. The values showed that both markets contracted with German PMI coming at 48.1 for March from 50.2-value registered for February. The European session opened to the news of lower than expected Chinese PMI result weakening risk appetite hence increasing the value of the dollar against major currencies.

The negative reports from the euro zone indicate that the region’s crisis is far from over and much more will have to be done to bring the situation back to normal. Despite the euro zone leaders’ positive comments about the situation in Greece, it seems like investors are shying away from the region. Comments by one of the ECB’s member that the ECB should gradually exit the crisis mode may not augur well with investors as reports indicate otherwise. Investors will now be keen on the efforts by the ECB to stick to its long-term refinancing operations as it maintains momentum for growth in the region.

The dollar rose against the euro by 0.4 percent to settle at 1.3159 after the results of the Euro zone PMI. The euro declined by 1.1 percent against the yen to sell at 108.98 at the start of the New York trading. China manufacturing figures negatively affected the Australian dollar declining 0.8 percent against the buck to sell at $1.0377.

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FedEx (FDX) reported that it earned $521 million, or $1.65 per share, versus $231 million, or 73 cents per share, in the same period last year. Revenue increased by $10.56 billion from $9.66 billion in the same period last year.

A year after the tsunami, Japan is trying to get the country back on track. But there’s a long road ahead. How is Japan going to reshape its energy future?

On March 11, the world paused to reflect the one-year anniversary of Japan’s tragic tsunami.

Over 15,800 lives were lost from this single event. It’s estimated over 3,000 people are still missing.

I don’t know about you, but disasters like this remind me to really appreciate the life I have. There are some incredible survival stories that still send chills up and down my neck every time I read them.

Of course, Japan is working hard to figure out a way to get the country back on track. But there’s a long road ahead.

One of the biggest challenges… How is Japan going to reshape its energy future?

Japan’s New Energy Outlook

Over the past year, the tsunami forced Japan to depend much more on fossil fuels…

• Liquefied natural gas (LNG) imports hit an all-time high in January and jumped 28% during 2011.
• Coal imports for electricity generation increased more than 26% in January from a year earlier and increased nearly 8% last year.
• Japanese imports of crude oil exploded 350% this month compared to March 2011. Overall oil consumption increased 9%, or by 275,000 barrels per day, over the year.

Barclays Capital says, “Neither the Japanese government nor environmentalist groups are happy about relying more heavily on fossil fuels.”

It’s pretty much guaranteed Japan’s dependency on fossil fuels will continue to surge for several years.

In January, Japan’s trade deficit hit a record high of $7 billion.

Meanwhile, all but two of its nuclear reactors are shutdown and renewable energy only accounts for 2% of its electricity output.

Before the tsunami, Japan was the world’s third-largest producer of nuclear power. It provided 30% of the nation’s entire energy needs. Today, there’s plenty of debate about whether or not the country will ax its nuclear energy program altogether.

If this happens, fossil fuel imports would likely stay at record highs for years to come.

This is simply the new reality Japan must deal with. It’s going to be a tough challenge for the country for a long time.

But for companies like Total S.A. (NYSE: TOT), Japan’s new energy landscape provides unique opportunities to profit…

Total S.A.: A Backdoor Play on Japan

Total S.A. is already a major oil and gas company.

Based out of France, the company has a market cap of $126 billion, and owns and operates major energy projects all over the world.

In Indonesia, it’s the country’s leading producer of natural gas.

According to The Jakarta Globe, Total produces 30% of Indonesia’s gas production and has 14 trillion cubic feet of reserves.

Much of this comes in the form of LNG, which Indonesia is the second-largest exporter in the world of. And Japan is currently Indonesia’s biggest LNG customer.

Rigzone.com reports Japanese “LNG imports are expected to remain the largest incremental gainer in 2012.”

In other words, as Japan continues to ramp up its demand of fossil fuels, especially LNG, Total will be one of the first companies to benefit from the extra spending.

Good Investing,

Mike Kapsch

Article by Investment U

London Gold Market Report
from Adrian Ash
BullionVault
Thurs 22 March, 09:15 EST

WHOLESALE bullion fell hard in early London trade on Thursday, with the gold price dipping to nearly its lowest level in 2012 as world stock markets and commodity prices also fell.

India’s jewelry sector remained on strike in protest at last week’s doubling of import duties, and “with physical demand not at full strength and waning investor enthusiasm, the potential for further downside in [the gold price] remains exposed,” says today’s note from Standard Bank.

Silver prices also dropped over 1% in London trade, touching their lowest level against the US Dollar since Jan. 25th at $31.70 per ounce.

Worse-than-expected European data was this morning preceded by news that China’s manufacturing activity has now contracted for five months running.

“Shrinking manufacturing activity in March signals slower demand for resources,” notes a column from Thomson-Reuters Breakingviews.

“Strong imports have heightened the risk of overstocking in precious metals.”

Late-January’s Chinese New Year – a peak season for consumers to buy gold – coincided with sharp falls in the volume of bullion being imported to China from Hong Kong, falls which followed an earlier surge in China’s gold imports during late 2011.

Albert Cheng of global market-development organization the World Gold Council said earlier in March that Beijing and Shanghai stores had reported “fantastic” sales over the Lunar New Year, “completely clear[ing] out the inventory they had built up.”

In the wholesale market, “A lot of people are on the sidelines at the moment,” said Yuichi Ikemizu, commodities chief in Tokyo for Standard Bank, to Reuters early on Thursday.

“We saw some bearish signs, but the [gold price] seems to be holding well. The upside at $1,800 is still looking quite heavy, and investors are waiting for a cue.”

“We feel that gold is consolidating and remains vulnerable to the next leg lower,” reckons Russell Browne at Scotia Mocatta, commenting shortly after Wednesday’s US close.

“Silver also continues to consolidate…[in] a daily downtrend providing near-term resistance around $32.60.”

The ratio of silver to gold prices yesterday hit a 1-month high at 51.6. The Gold/Silver Ratio rises when the gold price outperforms silver, and vice versa.

Last April the Gold/Silver Ratio hit a 32-year low, with each ounce of gold equivalent in price to just 30 ozs silver. It peaked near 85 in the wake of Lehman Brothers’ collapse in September 2008.

Early Thursday, “Speculation of reduced demand for raw materials from China has continued to weigh on risk sentiment,” says Swiss refinery and finance group MKS in a note.

“People are concerned about China’s economic growth,” Reuters quotes a Hong Kong bullion dealer.

“If growth slows down and inflation eases, people may choose not to buy gold.”

Following the Chinese news on Thursday, European economic figures also came in below analyst forecasts, with Germany’s manufacturing PMI contracting faster and Eurozone industrial orders falling 3.3% in January from 12 months before.

UK retail sales also undershot analysts’ predictions, shrinking 0.3% last month from January.

Crude oil prices meanwhile fell 1% Thursday morning, with Europe’ benchmark Brent price slipping to $122 per barrel after French industry minister Eric Besson said that major G7 governments are considering a co-ordinated release of emergency stockpiles to push prices down.

A Gallup poll this month found that 85% of US citizens think Washington “should take immediate actions to try to control the rising price of gas.”

Brent crude hit fresh all-time highs in mid-March for both Eurozone and UK oil consumers, peaking 3% above the previous all-time high of July ’08, reached two months before the global banking crisis accelerated with the Lehman Bros. collapse.

“We can reel off a whole load of airlines that are teetering on the brink or are really gone,” said Tim Clark, president of Emirates Airlines in Dubai, the world’s biggest international carrier, to Bloomberg on Wednesday.

Pointing to record oil prices and a slump in demand, “Roll this forward to Christmas, and we’re going to see [the airline] industry in serious trouble,” says Clark.

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

ConAgara Foods (NYSE:CAG) is scheduled to report quarterly earnings on Thursday.Analysts are expecting EPS of $0.49 and revenues of $3.35 billion.ConAgra Foods (NYSE:CAG) has potential upside of 4.7% based on a current price of $26.31 and an average consensus analyst price target of $27.56.ConAgra Foods is currently above its 200-day moving average (MA) of $25.39 and should find resistance at its 50-day MA of $26.63.In the last five trading sessions, the 50-day MA has remained constant while the 200-day MA has remained constant.

By The Sizemore Letter

Apple (Nadaq: $AAPL) made headlines this week by announcing that, at long last, the company would start paying a dividend.  This is fantastic news, not just for the Apple shareholders that had been agitating for the change, but for the broader investing public.  Apple is one of the most closely watched and admired companies in the world; perhaps other technology companies (ahem…Google?) will follow Apple’s lead and start moving in the direction of shareholder friendliness.

Don’t get me started on Google, by the way.  That company has a rare talent for pouring shareholder cash down the drain on quixotic pet projects that add little to revenues and even less to profits.  None of this would be possible were it not for the gargantuan monopoly-like rents that the company is able to collect on its search franchise.  The responsibility of paying a dividend might force Google to grow up and be an adult company befitting its size and importance to global economy rather than continue as a spoiled adolescent with too much money.  But I digress…

In the case of Apple, it was about time.  With $100 billion in cash sitting on the company’s balance sheet more or less inert,   Apple was doing a real disservice to its long-term shareholders.

And herein lies a key point: long-term.  The growing popularity of dividends in recent years may be the most positive development in the capital markets in my lifetime.  It’s a return to a more sober, rigorous form of investing that favors stable, long-term returns.  It takes away the casino gambling mentality and replaces it with something far more constructive.

Money managers of my generation grew up in the hot-money, high-turnover markets of the late 1980s and 1990s, a period that saw the average holding period of a stock investment shrink from years to just months.  In this kind of market, the payment of a quarterly cash dividend seemed almost anachronistic.  Besides, dividends were taxed more heavily than capital gains, so why not use the cash for share buybacks?  The market always rises, after all.

It is amazing how two bear markets and twelve years of P/E multiple contraction will change investors’ thinking.  Part of this too is the math of demographics.  The same Baby Boomers that were aggressively investing for growth a decade ago are now at a different stage of their lives.  Income is now far more important than it was before, particularly given the poor yields on offer on the bond market.  As the largest and richest generation, the investment preferences of the Boomer become the de facto standard.

With all of this as an introduction, I’d like to leave readers with two ETF recommendations that focus on dividends.  One focuses primarily on current income, the other on long-term growth.

We’ll start with current income.  On this count, I consider the very first dividend-focused ETF to still be the best—the iShares Dow Jones Select Dividend ETF (NYSE: $DVY).  DVY’s underlying index takes the universe of dividend-paying stocks with a positive dividend-per-share growth rate, a payout ratio of 60 percent or less, and at least a five year track record of dividend payment and then selects the 100 highest-yielding stocks.  The result is an ETF loaded with high-yielding, reliable dividend payers.

Not surprisingly, DVY is heavily weighted in utilities and defensive consumer staples, currently 30 percent and 16 percent of the portfolio, respectively.  The current dividend yield is 3.3 percent—significantly higher than what the 10-year Treasury pays.

As it is currently constructed, DVY is not likely to outperform the S&P 500 in a normal, rising market.  It should, however, hold up far better during a market rout. (Looking back at the ETF’s history, DVY took a beating in 2008 because it had a high allocation to the financial sector at the time; today’s high allocation to more defensive sectors makes DVY far more conservative than it was five years ago.)

DVY is fine for current income.  But if it is growth you seek, try shares of the Vanguard Dividend Appreciation ETF (NYSE: $VIG).  At 2.0 percent, VIG yields far less than DVY, more or less in line with the broader S&P 500.  But you don’t buy VIG for its dividend today; you buy it for its dividend tomorrow

VIG is based on the Dividend Achievers Select Index, which requires its constituents to have at least 10 consecutive years of rising dividends.  Any stock currently in the portfolio raised its dividend during the crisis years of 2008 and 2009.  These are companies that can survive Armageddon because, frankly, they already have.

Experienced investors can eschew the ETFs and cherry pick their own dividend-focused portfolios.  A recent dividend payer like Apple will not be found in either ETF, and even a dividend-raising powerhouse like Apple’s rival Microsoft (Nasdaq: $MSFT) lacks the history to be included in the Vanguard ETF.  I would be tempted to include both in a custom-built dividend portfolio.

Disclosures: DVY and MSFT are held by Sizemore Capital clients.

Apollo Global Management (NYSE:APO) announced Wednesday that it plans to purchase Bank of America’s (NYSE:BAC) Irish consumer-credit-card portfolio that consists of more than 200,000 customer accounts with a balance over $800 million.Terms of the deal were not disclosed.Bank of America is currently above its 50-day moving average (MA) of $7.80 and above its 200-day of $7.58.In the last five trading sessions, the 50-day MA has climbed 2.86% while the 200-day MA has slid 0.31%.

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

Source: ForexYard

The US dollar was able to reverse some of its recent losses during the afternoon session yesterday, following the release of the Existing Home Sales figure. While the figure came in below expectations, it was still taken as a sign that the housing market in the US is improving. Turning to today, the marketplace could see some volatility as significant British and euro-zone news is set to be released. Traders will want to note the results of the British Retail Sales figure and a speech from the ECB President. Should either of them turn out to be positive, there may be an increase in risk taking throughout European trading.

Economic News

USD – Housing Data Boosts Dollar

The US dollar saw gains against several of its main rivals yesterday, as investors took recent higher US treasury yields and housing data as evidence that the US economic recovery is continuing. Despite the fact that the US Existing Home Sales figure came in below analyst forecasts, the number still represented a significant improvement from this time last year.

Against the Swiss franc, the dollar moved up over 60 pips throughout the European session, reaching as high as 0.9145 before staging a mild downward correction. The EUR/USD, which had been trading steadily for most of the day, tumbled during the afternoon. By the end of European trading, the pair was down close to 100 pips, reaching as low as 1.3178.

Turning to today, several pieces of news are forecasted to generate volatility for the greenback. Traders will want to note the results of the weekly US Unemployment Claims figure, scheduled to be released at 12:30 GMT. Should the figure come in below forecasts, the dollar may be able to extend its bullish run as a result. Later in the day, a speech from the ECB President may impact the EUR/USD pair. Any pessimistic signs in the speech regarding the euro-zone economic recovery could help the dollar move up vs. the common currency.

EUR – Euro Tumbles vs. Main Currency Rivals

The euro saw a steep drop against its main currency rivals during the evening session yesterday. The EUR/USD, which had reached as high as 1.3283 earlier in the day, tumbled to 1.3178 by the end of European trading. The EUR/JPY fell some 80 pips during the afternoon session, reaching as low as 110.26 before staging a slight upward correction.

Analysts attributed the euro’s bearish trend to renewed worries regarding the debt situations in several countries in the region. Both Spain and Portugal may need to restructure their respective debts in the near future. Should this occur, it may trigger a fresh round of euro selling.

Turning to today, euro traders will want to pay careful attention to speech from the President of the European Central Bank, scheduled to take place at 16:00 GMT. The euro tends to see heavy volatility following speeches from the ECB President, and today is likely to be no different. Should the speech lead to renewed doubts in the strength of the euro-zone economic recovery, the common currency may drop as a result.

JPY – Yen Gains Broadly Amid Risk Aversion

The yen saw significant gains against both the euro and US dollar yesterday, as risk aversion in the market place caused investors to shift their funds to safe-haven currencies. The EUR/JPY dropped as low as 110.26 by the end of the European session, erasing the pair’s earlier gains. The USD/JPY, which earlier in the day approached an 11-month high, fell over 50 pips during the afternoon session before stabilizing at 83.65.

Turning to today, yen traders will want to pay attention to the weekly US Unemployment Claims figure, set to be released at 12:30 GMT. With analysts predicting today’s news to show ongoing improvements in the US employment sector, the yen could reverse yesterday’s gains against the dollar during the afternoon session.

Crude Oil – Crude Oil Spikes Following Surprise US Inventory Figure

The price of crude oil shot up yesterday, following an unexpectedly low US inventory figure. US crude oil inventories came in at -1.2M this week, significantly lower than the forecasted 2.4M. Investors interpreted the news as a sign of increased demand in the US, which led to a spike in prices. The commodity was up close to $1 during evening trading, reaching as high as $107.50 a barrel.

Today, crude oil traders will want to pay attention to both the US Unemployment Claims figure, and a speech from the ECB President. Should the unemployment number signal an improved labor sector in the US, demand for oil may go up which could further boost prices. That being said, if the ECB President’s speech implies that the euro-zone economic recovery has stagnated, riskier commodities like oil may drop as a result.

Technical News

EUR/USD

In a sign that this pair could see a price shift in the near future, the Bollinger Bands on the daily chart are beginning to narrow. A bearish cross on the same chart’s Stochastic Slow indicates that downward movement could occur. Traders may want to short their positions ahead of a possible downward breach.

GBP/USD

The Williams Percent Range on the weekly chart is currently at -20, indicating that downward movement could occur in the coming days. A bearish cross on the daily chart’s Slow Stochastic supports this theory. Going short may be a wise choice for traders ahead of a possible downward breach.

USD/JPY

A bearish cross on the weekly chart’s Slow Stochastic indicates that the pair could see downward movement in the coming days. That being said, most other technical indicators are showing that the current bullish trend may continue. Traders may want to take a wait and see approach for this pair.

USD/CHF

The Williams Percent Range on the daily chart is currently right around the -80 level, indicating that this pair could see an upward correction. At the same time, most other technical indicators are not showing a clear direction at this time. Taking a wait and see approach may be the wise choice for this pair.

The Wild Card

EUR/JPY

The daily chart’s Relative Strength Index has crossed over into overbought territory, indicating that a downward reversal may occur in the near future. A bearish cross on the same chart’s MACD/OsMA lends support to this theory. Forex traders may want to go short in their positions ahead of a possible downward correction.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.